Pre-made dishes are moving towards standardization, and with the recovery of offline dining and the increased investment from giants, the industry landscape is set for new changes. After the pandemic, new retailers are gearing up to make a big push in pre-made dishes. Hema's pre-made dishes department made its public debut on April 13, becoming a first-level department alongside its import and private label businesses; earlier this year, Dingdong Maicai also announced its expansion of the pre-made dishes department, launching a 'Pre-made Dishes Partner' recruitment plan. Both companies have projected sales of 5 billion yuan for pre-made dishes this year. Pre-made dishes have been hot in the past two years, with the market size reaching 419.6 billion yuan in 2022. Besides specialized pre-made dish manufacturers, players from catering, retail, and even raw material suppliers have entered the field. This year, pre-made dishes were included in the Central Document No. 1 for the first time, and the industry is seen as the next 'trillion-level' trend. However, due to low entry barriers and regional dietary differences, the industry is not highly concentrated and is still dominated by small and medium-sized enterprises. Pre-made dishes are moving towards standardization, with the Ministry of Agriculture, local governments, and industry associations all developing relevant standards. Combined with the recovery of offline dining and the increased investment from giants, the industry landscape will also see new changes. Future competition will largely depend on channels, marketing, and distribution. For new retailers, pre-made dishes are valuable in improving product differentiation, profit margins, and helping with organizational integration and upgrading. This is the fundamental driving force behind their continued investment in pre-made dishes. And based on the e-commerce entry points, digital platforms, and supply chain systems they have already built, they may also be the most promising 'harvesters'. Pre-made Dishes in the Retail Context Pre-made dishes in the retail context are clearly distinct from the definitions used in the traditional catering and food processing industries. Currently, pre-made dishes are divided into three categories: ready-to-eat, ready-to-heat, and ready-to-cook. This classification is more retail-oriented, including frozen products, chilled products, hot cooked foods, and primary processed agricultural products like cleaned vegetables. In terms of scenario positioning, new retailers' pre-made dishes emphasize meeting the daily segmented needs of families. Chen Huifang, General Manager of Hema's Pre-made Dishes Department, told The Narrow Broadcast that their pre-made dish products are further segmented based on the needs of Hema district users. Some products target the 'five meals a day' for community families, while others focus on meeting the quality and cooking convenience requirements of middle-class customers after consumption upgrades. The foundation for new retailers to achieve this is the digital capabilities they have been accumulating from the start. It helps emerging retail channels quickly identify potential market demands and respond. Through repeated trial and error, the target audience for pre-made dishes in the retail context has been further clarified. Based on user research and consumption data feedback, Dingdong Maicai found that the target scenarios for pre-made dishes do not completely overlap with the lazy economy. 'In the past, some platforms made a mistake when doing pre-made dishes, thinking it only belongs to the lazy economy,' said Ou Houxi, head of Dingdong Maicai's pre-made dishes department. 'But the lazy scenario doesn't need pre-made dishes; takeout is more convenient because it doesn't require cooking or washing dishes.' This difference in scenario setting stems from the different supply chain and sales channel characteristics associated with retail, catering, and food processing. In the catering context, pre-made dishes are more about serving the trend of catering retailization. It emphasizes transferring the existing dish development and production capabilities of the catering industry to retail products, and relying on such products to bring additional transaction volume or brand added value beyond dine-in. In the food processing context, pre-made dishes are consumer goods that rely on the distribution networks built by brand owners to reach customers. Under such a supply and marketing system, new and old brand owners in the food processing field focus more on meeting users' needs for quick cooking. Among them, young people, with their fast-paced lives and weak home cooking skills, have a higher acceptance of pre-made dishes than middle-aged and elderly people, making them the most important consumer group. Based on this, food processing brands emphasize developing internet-famous products targeting young people's segmented needs such as the lazy and single economy. During this period, some new brands achieved rapid growth by leveraging the surge in demand during the pandemic, such as those focusing on self-heating hot pots and Zhenwei Xiaomeiyuan. In the retail context, pre-made dishes are one of many SKUs in a retailer's product range. The products sold through retail channels serve the daily needs of residents around their stores or front warehouses. In this scenario, the main target customers for pre-made dishes are also families. More Aggressive New Retailers Affected by the three-year pandemic, pre-made dishes have received significant attention from the domestic retail industry. Both traditional channels and emerging platforms are increasing their efforts in building the pre-made dish category. For example, Tianhong Supermarket moved the display area for pre-made dishes from the edge of the store to the central area during the pandemic, and changed from a joint operation model to a self-operated model; Yonghui, Sanjiang, and other supermarkets have launched their own private label pre-made dishes. New retailers are taking bigger steps. Dingdong has been laying out pre-made dishes since 2020. Currently, it not only has its own brands such as Boxing Shrimp, Cai Changqing, and Dingdong Daguanyuan, but its supply chain company has also launched an independent brand for external channels - Chaoxi Fresh Food. Last year, Dingdong established an independent pre-made dishes department, at the same level as its product development department. Hema upgraded its 3R (ready-to-cook, ready-to-eat, ready-to-heat) department to an independent business unit in 2020, and in October last year, it proposed to become the 'first channel brand for fresh pre-made dishes'. Pre-made dishes help retail channels differentiate their products and also help them integrate upstream suppliers, fresh produce procurement, and other supply chain resources. For new retailers that have gone through the previous round of fresh e-commerce battles, pre-made dishes are now even more important. First, pre-made dishes are different from fresh produce. As the degree of processing deepens, the sales end of pre-made dishes becomes less sensitive to upstream raw material costs. Compared to fresh produce, pre-made dishes also have higher gross profit margins. Li Xue, a special researcher at the Japan Distribution Economics Research Institute, previously analyzed in an interview with The Third Eye on Retail that the gross profit margin of pre-made dishes is at least 10% higher than fresh produce overall. 'The gross profit margin for ready-to-deliver products can exceed 20%, and for ready-to-eat products, it can reach 40-50%. The gross profit margin for ready-to-cook and ready-to-heat foods developed by manufacturers is basically the same as pre-packaged foods, at about 20%.' Second, compared to fresh produce, pre-made dishes with processing steps offer more possibilities for productization. The vast regional dietary cultures in China provide rich support for the selection of pre-made dishes. Specifically at the product level, in the past two years, we have noticed that new retailers, in conjunction with scenario-based operations on the product side, have been continuously innovating in pre-made dishes and bringing in order increments. The common feature of these two products is that they find differentiated dishes from regional specialty food customs and transform them into pre-made dishes. For example, Hema's eight-treasure glutinous rice red crab is selected from the New Year customs of southern Fujian and Taiwan; Dingdong's air fryer squirrel-shaped mandarin fish is a collaboration with the Shanghai time-honored restaurant 'Lvbolang', which provides support in recipe and taste restoration. In addition, the low-temperature, short-shelf-life pre-made dishes that new retailers are currently focusing on not only bring greater market value but also place higher demands on the supply chain, including cold chain logistics. The early investment by new retailers in these hardware facilities raises the barrier for later entrants. Compared to traditional frozen pre-made dishes, low-temperature, short-shelf-life pre-made dishes do not require thawing and have a much shorter shelf life than frozen products. Besides convenience, these products can lead to higher purchase frequency and also have a 'healthy' selling point. Taking Dingdong's chilled crayfish as an example, Ou Houxi said, 'Frozen crayfish is likely a stockpiling purchase behavior, but for chilled crayfish, some users may come to buy every day.' Dingdong's super factory produces cold-eating crayfish. Chilled foods require channels to have higher circulation efficiency and quality control capabilities. This means higher cold chain logistics costs and supply chain barriers. Last year, Dingdong launched a crayfish super factory in Xuyi County, Huai'an, Jiangsu, mainly producing frozen and chilled crayfish. Liu Xin, the factory's quality control head, told The Narrow Broadcast that the production, quality control, and inspection standards for cold-eating shrimp, as well as the requirements for raw material circulation and finished product turnover efficiency, are higher than for frozen shrimp. Hema has a similar layout on the supply side of pre-made dishes. Last year, Hema's central kitchens in Wuhan, Chengdu, and other places were put into production one after another, along with the 300 fresh food supply chains accumulated earlier, to meet the circulation needs of products across temperature zones. According to Xiong Zifu, Deputy Dean of Hema's Industrial Research Institute, the most core and underlying logic behind the growth of pre-made dishes is not the pandemic, but the development of cold chain logistics infrastructure as a new infrastructure. The development of multi-temperature cold chain logistics stimulates the market and demand, drives the improvement of consumer experience, and thus brings an industry trend. Providing a Blending Field However, compared to standard products in retail channels, pre-made dishes have a shorter update cycle. A reference data point comes from Tianhong Supermarket. According to data released by The Third Eye on Retail, Tianhong Supermarket's pre-made dish products have a monthly replacement rate of 5%-6%, while its standard products have a replacement cycle of half a year. Although new retailers have not published relevant replacement rate data, their product operation strategies also reflect the shorter sales cycle and higher frequency of new product trials for pre-made dishes. At this level, through repeated exploration around products, new retailers are gradually establishing deeper and more diverse interactive relationships with upstream suppliers. This will form a field where all links in the industry chain integrate and innovate with each other. In the past three years, whether in the catering industry, food processing industry, or upstream production areas, a common objective environment has been the shrinking demand for traditional catering due to the pandemic. They need to more actively explore retail products and seek new growth space. Through the changes in Hema and Dingdong's pre-made dish partners, we can feel this. Similar dynamic cooperation is also seen in Dingdong's collaboration with catering brands. For example, in this year's New Year dish series, Dingdong facilitated deep cooperation with multiple Shanghai time-honored catering brands. Since last year, catering brands have shown a more active willingness to cooperate with retail channels under the influence of the pandemic. In some agricultural production areas that traditionally rely on the catering industry, cases of joint transformation and upgrading with downstream retail channels have also increased. Dingdong's crayfish farming base in Xuyi. Xuyi is one of the famous crayfish production areas in China, and Dingdong has built a crayfish pre-made dish supply chain there. On the procurement side, Dingdong cooperates with the regional leader Xuyi Crayfish Group, which provides crayfish that meet Dingdong's product standards and specifications; in the processing stage, Dingdong and the local government jointly invested in the establishment of a crayfish super factory, covering an area of about 15,000 square meters, capable of processing 40,000 jin of live shrimp per day. Currently, domestic crayfish production areas have fallen into fierce competition for existing market share. In addition, the decline in catering demand caused by the pandemic has increased the survival pressure on production areas. Through direct cooperation with retail channels, production areas can enter the consumer market through a shorter chain. A new round of competition in pre-made dishes in the retail industry has begun. New retailers are increasingly involved in the upstream of the pre-made dish industry chain. No matter which level of upstream suppliers, there will be more possibilities in the future.